Every Non Profit Organization (NPO) leader needs to understand the role of Governance and a Board of Directors for their organization, whether they be the founder of an idea stage NPO with no formal Board of Directors or the leader (CEO or Board Chairperson) of a well run mature NPO. Governance is at the heart of insuring that an organization is having the community impact that its supporters intend for it to have. The basic concepts of governance (“why”) do not change significantly as an NPO matures, but the “how” and “who” of governance is accomplished will dramatically change.
Before considering how governance changes with organizational maturity and who governs, let’s talk about what the “governance role” needs to accomplish from the very beginning of an NPO. Even a new founder with only an idea needs to fill this role which is normally (later) associated with a Board of Directors. Proper governance is what insures the organization is doing the “right things” and that there is a reasonable chance that these “things” will be accomplished.
First: The governance role must represent the “owners” of the organization, not just the founder or the clients. By definition of an NPO the community is the “owner”, but in reality there are segments of the community which care a lot more about the NPO mission than others. These are the “owners” that governance must represent.
Second: The governance role must determine and review continually why the organization exists and what results (not just activities) should be expected. A founder should clearly determine and document this reason for existing even if he/she is the primary audience. If a founder wants to bring anyone else alongside them to grow the organization those people will want to know this.
Third: The governance role must clearly assign the responsibility for accomplishing the results and set operating limits for what is acceptable in accomplishing the results. This is the old idea – the ends don’t always justify the means. It is the governance role that determines limits on acceptable means.
Fourth: The governance role must continually monitor that results are being accomplished within the limitations which were set. All of these governance responsibilities are important no matter how mature an NPO may be. Although mature NPO Boards may recognize these needs, they need to be accomplished for any organization, even if it means that the one person show known as the founder sits down and fills this role before resuming the “one armed paper hanger” role. The point is that governance should be accomplished for every organization, although how governance is accomplished will change as an organization matures.
Now that we understand that the governance role must be accomplished somehow for any organization the question becomes “who” and “how”? One instructive way to consider this is to use a lifecycle model of NPO maturity popularized by Dr. Susan Kenny Stevens. She has spent a career developing a structure to describe how the overall capacity of an NPO changes as the organization goes from an idea to a mature organization (and possibly back down again). This has proven very useful in helping NPOs understand where they are in terms of maturity, what aspects of their capacity might be “out of whack” and what it might take to move on up the maturity ladder. Governance is only one aspect of an organization’s capacity, but it is an important and enabling one. The remainder of this article will discuss how “governance” is typically accomplished at the various stages of maturity.
During the “idea stage” governance will need to be accomplished at first by the founder. Before moving from this stage a Board of Directors should be at least formed, by-laws developed and articles of incorporation filed. By the time an organization grows through the “start-up stage”, the Board membership should have expanded beyond just friends of the founder. The Board members need to be making decisions, and governing, in the organization’s best interest, not necessarily the founder’s. The Board will be setting organizational directions as we discussed above and will be assuming some organizational ownership. During the always exciting “growth stage” The Board and staff will move to a shared ownership of the organization. The Board will understand its governance role and be willing to make decisions related to their governance role. To assist the Board in their governance role, processes such as committee structure, Board terms of office and Board recruiting will be established. The situation changes again as organizations reach the coveted “mature stage”. As a reminder, mature does not equal static. When we look at all the aspects of organizational capacity we will see that a mature organization, supported with mature governance, will continually renew itself by staying market focused and in touch with its community. At this level the Board sets direction, is policy oriented and leaves management to the Executive Director. The Board plays a leadership role and has the competence to keep the organization focused and vital.
The common theme as an NPO moves from an idea to a mature healthy organization is that the governance role is being accomplished by someone or some group.
Governance, no matter who does it, is the function which is responsible for a non profit organization knowing what it should be and is accomplishing on behalf of its community owners. Governance is also the key to allowing an Executive Director a reasonable opportunity to accomplish these results. For growing and mature organizations this means that the Board of Directors and the Executive Director need to understand their part of the success formula and focus on doing their part well. Both have significant roles in leading the organization to a position of being a valued community asset.
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